Report DNF 2023 - CONSOB AND ITS ACTIVITIES
Report 2023 on non-financial reporting of Italian listed companies
Report 2023 on non-financial reporting of Italian listed companies
| The 2023 edition of the Report examines how companies under analysis have implemented the non-financial reporting regulation, introduced by the Directive 2014/95/EU (Non-Financial Reporting Directive - NFRD) and transposed in Italy by Legislative Decree No.254/2016. The analysis, in line with the methodology employed in previous editions, focuses on the behaviours that may signal progress in the consideration of ESG (Environmental, Social and Governance) factors in the definition and adoption of business models, corporate strategies and corporate governance models of Italian listed companies. In the light of the extensive legislative production and innovations related to the forthcoming implementation of the sustainability reporting framework, recently transposed at national level, this year’s edition of the Report includes an initial section which provides a general overview of the regulatory framework on the subject. The reconstruction is not intended to be exhaustive, but rather to offer a reminder of the main stages of regulatory development at European and national level. . ... more |
| In line with the previous editions of the Report, the analysed data concern Italian companies with ordinary shares listed on the main Italian regulated market, organised and managed by Borsa Italiana Spa (Euronext Milan - EXM) as at 31 December 2022 (202 companies). The data presented in the Report are the result of a documentary analysis. In particular, the first Section 'Non-financial reporting' analyses the non-financial statements (NFSs), published by firms in 2023 and referring to the 2022 financial year, and the information reported therein. This analysis makes specific reference to the methods employed by companies to identify relevant reporting issues (materiality analysis) and to represent them, also in view of the forthcoming entry into force of the new regulations on sustainability reporting. Furthermore, the analysis of the first Section was also conducted with reference to the abstracts of the Strategic plans, when available, presented to investors at road shows and/or published in the Investor Relations section of companies' websites; in detail, the analysis verifies how and to what extent companies describe a strategy that integrates and connects financial and non-financial issues. In addition, a brief in-depth analysis concerns the information gathered from the auditors' opinions on the NFSs and their auditing reports on the financial statements, published in 2023. In the second Section ‘Non-financial at the board’, in order to understand the board's involvement and role in the transformation process, information included in other corporate documents published in 2023, such as the board's guidelines, the company's corporate governance reports, are also analysed. The third section ‘Remuneration policy and sustainability’ analyses information in the reports on remuneration policies published in 2023, to examine whether the variable remuneration of CEOs is linked to ESG objectives. Further details about the source of information and the data presented in this Report are provided in the Methodological notes section. |
| The section 'Non-financial reporting' shows that in 2023, among the 202 Italian companies with ordinary shares listed on EXM at the end of the previous year, 144 (representing 71.3% of the total, 96.7% in terms of capitalisation) published a non-financial statement (NFS) in accordance with the Legislative Decree No. 254/2016, either because in the scope of the regulations in force (140 issuers) or on a voluntary basis (four issuers). ... more |
| In most cases (111, or 77%) the NFS was presented as a separate document from the management report and, for the purpose of preparing the document, 49 companies (or 34%) have adopted internally defined procedures or guidelines. All companies prepared the NFS in line with the GRI (Global Reporting Initiative) reporting standards and, following the guidelines set out by the same, they declared to report on relevant (or material) sustainability issues in relation to their business, as identified through a specific analysis process (materiality analysis). The materiality analysis was updated in the reporting year in 98.6% of cases. As part of the updating process, the percentage of companies that involved internal structures or bodies (equal to 82.4% compared to 86.5% in the previous survey) and, among them, top managers (56.3% vs 62.4%) in the identification of material issues decreased in comparison to the previous year. On the other hand, there was an increase in the involvement of external stakeholders, whose views were taken into account in the identification of material issues by 69.7% of the issuers that updated the analysis (65.8% in the previous year). In all cases where involvement was recorded, the percentage of companies reporting information on the means of involvement also increased (reaching a rate of above 90% in 2023). Furthermore, there was an increase over the previous year in the number of companies that stated that they had involved the board of directors at the end of the process of identification of material topics: this occurred in 66.7% of cases, the highest percentage since 2019 (the first year of the survey). In anticipation of the implementation of the revised regulations on sustainability reporting, 40 issuers (28% of cases) were found to have also made references to the criteria for identifying relevant reporting issues in accordance with the forthcoming principles (also stating that they had conducted such an exercise in 21 cases). Therefore, they reported on both the actual or potential impact that the company's activity has on society and the environment and the impact that sustainability factors may have on the company's financial position (dual materiality analysis). In most cases (115, almost 80%), the NFS includes information with reference to the issuers' sustainability objectives or plans. Of these, 55 companies employed quantitative metrics and indicators to define the objectives and 58 companies provided information on the achievement of the targets. Furthermore, in 115 cases, companies made references to at least one of the UN Sustainable Development Goals (SDGs), either in relation to their own sustainability targets or by linking them to the material issues identified. The abstracts of Strategic plans were published by 67 issuers in 2023. Among these companies, 34 mentioned long-term sustainability considerations, 26 linked their strategy to SDGs, while 15 fully integrated into their plan communication issues generating values in short and long-term, describing the connection between financial and non-financial issues. The examination of the opinions expressed on the NFSs of the 144 listed companies under analysis that published the document in 2023 revealed that in 90% of cases the auditor who issued the opinion on the NFS was the same as the auditor who carried out the statutory audit of the financial statements. Furthermore, the auditor always expressed his opinion in the form of limited assurance, except in two cases, where he did it in a ‘mixed’ form. The analysis revealed no qualified or adverse opinions, nor disclaimer of conclusions. |
| The Section 'Non-financial at the board' highlights how all indicators of the integration of ESG factors into the board's decision-making process have improved compared to 2022, with the only exception of a steady trend recorded with respect to the data concerning induction programmes. ... more |
| In 2023, out of the 45 firms publishing the NFS and renewing the board of directors, 29 companies published guidelines for the appointment of new directors, mentioning non-financial issues in 28 cases (about 62% of the total companies that renewed the board, up from 43% in 2022). In the board self-assessment, ESG factors were cited in 54 cases (compared to 45 cases in 2022), while 56 issuers (38.9% of the total) included them in induction programmes for board members (58 in 2022, equal to 39.2%). As disclosed in the corporate governance reports published in 2023, the number of companies that have set up a sustainability committee has also increased. Of those that have also published a NFS, 108 companies were found as having a sustainability committee; the figure corresponds to 75% of the total, compared to around 70% in the previous year. |
| The third Section ‘Remuneration policy and sustainability’ analyses the integration of ESG criteria into CEO remuneration policies. ... more |
| Issuers linking CEOs remuneration to non-financial factors increased up to 137, from 127 in the previous year. In particular, the reference to ESG issues concerns the short-term component of the remuneration in 118 cases and the long-term component in 88 cases. The average percentage of short-term variable remuneration linked to ESG factors is equal to 18,5%, showing a slight decrease compared to the previous year (about 21% in 2022). As for long-term variable remuneration, the average percentage linked to ESG factors is 19%, in line with 2022 and slightly up from previous years. |
| This edition of the Report includes, for the second year, an Addendum ‘Implementation of Article 8 of the Taxonomy Regulation’. ... more |
| The Addendum was prepared by: Stefano Di Iorio - CONSOB, Issuers Information Department (s.diiorio@consob.it) Valeria Gentile - CONSOB, Issuers Information Department (v.gentile@consob.it) The authors wish to thank Erminio Ariano, Tiziana Casini and Alessandro Scalla for their assistance in the analysis of the data. In particular, the findings in the Addendum are based on the NFSs referring to the financial year 2022, published in 2023 by the 142 Italian companies with listed ordinary and savings shares subject to the obligation to publish the NFS, and concern the second year of application of the disclosure requirements under Article 8 of the Taxonomy Regulation. A detailed focus was also developed with regard to information reported by the 33 Italian companies included in the Ftse Mib index at the end of 2022 which published their NFS in 2023, to analyse the quantitative and qualitative disclosure provided by issuers in compliance with the new requirements. |
| The evidence presented in the Report indicates that the path taken by Italian listed companies following the entry into force of the regulations on non-financial reporting has triggered a process of change towards a greater consideration of sustainability issues within business models and corporate governance. ... more |
| Indeed, based on the information reported in the NFSs, there has been an increase in the percentage of companies that involve external stakeholders in the updating of the materiality analysis over time, reflecting a greater interest in the viewpoint outside the company. In all cases in which the involvement of stakeholders - internal and external - is declared, there is also an improvement in the disclosure of the involvement methods. A positive trend can also be found with regard to the involvement of the board downstream of the definition of material topics, highlighting an increasing focus of board members on sustainability issues. This is also confirmed by the analysis of the other corporate documents taken into consideration. In particular, the reference to ESG issues in the board’s guidelines and in the board's self-assessment increased in percentage terms. A further element of transformation concerns the increasing frequency of board sustainability committees, adopted by a number of companies that, in terms of capitalisation, represent over 90% of the market. The number of issuers linking CEOs variable remuneration to sustainability targets also continues to increase. Further efforts emerge from the examination of the information reported pursuant to Art. 8 of the Taxonomy Regulation, which provide evidence of the efforts made by issuers under analysis. Despite these positive elements of transformation, the efforts that listed companies will have to make in view of the entry into force of the regulations on sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD), recently transposed into Italian law by Legislative Decree No. 125/2024, should not be underestimated. In this regard, some companies have already undertaken measures to adapt their business processes to the legislation on sustainability reporting, to be published by companies in 2025 with reference to the financial year 2024. |
The Report was prepared by:
Paola Deriu (coordinator) - CONSOB, Head of the Research Department (p.deriu@consob.it)
Angela Ciavarella - CONSOB, Corporate Governance Department (a.ciavarella@consob.it)
Giovanna Di Stefano - CONSOB, Research Department (g.distefano@consob.it)
Ilaria Fabbiani - CONSOB, Corporate Governance Department (i.fabbiani@consob.it)
Lucia Pierantoni - CONSOB, Research Department (l.pierantoni@consob.it)
Tommaso Nicola Poli - CONSOB, Research Department (t.poli@consob.it)
Greta Quaresima - CONSOB, Research Department (g.quaresima@consob.it)
Benedetta Ronchini - CONSOB, Corporate Governance Department (b.ronchini@consob.it)
The authors wish to thank Paola Paterna for the in-depth analysis on auditors attestations on NFSs and Silvia Conti for their assistance in the analysis of the data.
The opinions expressed in this Report are the authors’ personal views and are in no way binding on Consob.
All rights reserved. Reproduction for scholarly and non-commercial use permitted on condition that the source is cited.
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